Eric Church company is a price taker Eric Church Company is a price-taker anduses a target-pricing approach. Refer to thefollowing information:Production volume 920,000 units per yearMarket price $33 per unitDesired operating income 17% of totalassetsTotal assets $12,630,000What is the desired profit for the year?

To determine the desired profit for the year, we will use the given information:Total assets =…

Answered: Eric Church Company is a price-taker…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 17E

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Kreter, Inc. earned net income of $300,000 last year. This year it wants to earn net income of $450,000. The company's fixed costs are expected to be $300,000, and variable costs are expected to be 70% of sales. Determine the required sales to meet the target net income of $450,000 using the mathematical equation. Required sales $ Using a CVP income statement format, prove your answer. Fixed costsTarget net income / (Loss)SalesVariable costsContribution margin $ Contribution marginFixed costsTarget net income / (Loss)SalesVariable costs Contribution marginSalesVariable costsFixed costsTarget net income / (Loss) Fixed costsVariable costsSalesTarget net income / (Loss)Contribution margin SalesFixed costsContribution marginVariable costsTarget net income / (Loss) $
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Eric Church Company is a price-taker and uses a target-pricing approach. Refer to the following information: Production volume 920,000 units per year Market price $33 per unit Desired operating income 17% of total assets Total assets $12,630,000 What is the desired profit for the year?